The former government of Pakistan Tehreek-e-Insaf (PTI) took $15 billion gross foreign loans during its last nine months in power, bringing the total gross foreign borrowings to over $57 billion during its rule.
The Ministry of Economic Affairs on Thursday released the foreign debt bulletin for July-March period of the current fiscal year.
The figures were made public the day Pakistan’s outgoing Finance Minister Shaukat Tarin and his successor blamed each other about the worrying debt situation.
Total loans received by the last government of former prime minister Imran Khan from July through March of the current fiscal year amounted to $15 billion, according to the data of the Ministry of Economic Affairs and the State Bank of Pakistan (SBP).
These include disbursement of $13.5 billion by the international creditors and nearly $1.4 billion by the overseas Pakistanis.
The Ministry of Economic Affairs reported that it booked gross foreign loans of $12.6 billion in July-March of fiscal year 2021-22.
The SBP data showed that it also received nearly $1.4 billion in highly expensive foreign loans under the Naya Pakistan Certificates – a new borrowing instrument introduced by the previous PTI government to take more foreign loans.
As a result, the cumulative gross foreign loans secured in the first nine months of the current fiscal year jumped to a record $15 billion, showed the official statistics.
Around 90% of the new gross foreign loans were aimed at bridging the budget deficit and supporting the foreign exchange reserves, which remain at critically low level of $10.8 billion.
The former prime minister had remained very critical about burying the country under the debt burden by the PPP and the PML-N governments. But his government broke all previous records when it came to contracting new loans and adding the net debt.
Khan’s government took gross $57 billion loans during the 43 months rule, including loans taken on the balance sheet of the central bank like $2 billion from the United Arab Emirates (UAE) and additional $1.5 billion Chinese currency swap.
Earlier, the gross foreign borrowing figure had been reported at $53 billion due to the exclusion of the UAE and additional Chinese currency swap borrowing from the calculations.
Out of $57 billion, the previous government returned $26 billion in repayments and added $31 billion in the external public debt that is the responsibility of the finance ministry.
The PML-N government had taken roughly $33 billion gross foreign loans during its first four years in power
In June 2018, the external public debt was $75.3 billion that by December 2021 has already shot up to $102.3 billion – addition of $27 billion on the watch of Imran Khan.
The net addition during Khan’s period could touch to $30 billion once the March data is available.
The Economic Affairs Ministry statistics showed that in the fiscal year 2018-19, the PTI government took gross foreign loans to the tune of $11 billion.
Another loan of $2 billion was taken from the UAE on the books of the central bank. In that year, the International Monetary Fund (IMF) classified the Chinese safe deposit as part of the external public debt.
The former government took $10.6 billion in the year of 2019-20, excluding the IMF borrowing.
In fiscal year 2020-21, the PTI government took $14 billion gross foreign loans. The Economic Affairs Ministry reported $12.6 billion foreign loans in nine months. Separately, the PTI government took $3 billion from the IMF and $2.4 billion under Naya Pakistan Certificates that are booked on the SBP accounts.
Owing to the increasing reliance on loans to enhance the foreign currency reserves and finance the budget deficit, the cost of debt servicing has gone up significantly.
After the new government shared the deteriorating debt situation with the cabinet, former finance minister Shaukat Tarin and Miftah Ismail on Thursday blamed each other for the debt situation.
“Miftah Ismail please do not deceive people,” Tarin remarked.
Total debt taken by the PTI government was Rs17.8 trillion. Of which Rs8.9 trillion was interest payments, Rs4.4 trillion devaluation of rupee, Rs400 billion as buffer stock and only Rs3.9 trillion was net borrowing, tweeted Tarin.
He added that the debt to GDP (gross domestic product) ratio was 71.5% of the GDP at the end of the PML-N government, which Tarin claimed has been reduced to 66% during the PTI tenure.
However, Tarin made a wrong comparison of debt to GDP ratio by using two different base years of the economy, inviting reaction from his predecessor.
Total debt increased by the PTI by March 2022 exceeded Rs20 trillion.
“Why are you giving December 2021 figures,” responded Ismail through his series of tweets. “Isn’t that deception? Surely we expect better from you,” said Ismail.
The newly appointed finance minister said that the budget deficits incurred by PTI in the first three years totaled to Rs10.22 trillion.
“When computing debt to GDP, why are you (Tarin) using different bases on our year and yours,” questioned Ismail while pointing out inconsistencies in the argument built by his predecessor.
Published in The Express Tribune, April 22nd, 2022.